All Financial Matters

Teens are literal people. When you offer them a job for a certain amount of money, this is what they expect to receive. In the world of work, this is not the case. Teaching your teen about taxes can make the transition less of a shock.

Income taxes are collected from everyone no matter how much money they earn. The government creates revenue for itself through our tax dollars. They can fund the military in wartime and provide social programs to benefit its citizens.

For your teen, the hourly wage gives them an idea of what they will earn for the hours worked during a pay period. This number is not the amount that they will receive on pay day, however. Prepare your child by telling them how the income tax system works.

When they gain employment, their employer will give them a tax form to fill out. They probably won’t understand it, so parents need to help them fill it out and explain what it means. The state and federal government determines how much money to take through taxes from the information recorded on the form.

For teens with a job, the earning potential is not enough to file a tax form on April 15th of the following year. There is an amount that, if a person’s earnings fall below it, they are not subject to income tax filing. Your teen will almost surely fall in that exempted category.

Show your teen how to get the most money that they can on their check. Even teens are allowed to claim deductions. They can claim one deduction even if they are included on their parents’ tax return. That deduction will net them more money in their pocket. Since they won’t make enough to file, this is a wise decision for them to make.

Teens also need to understand that when their earnings increase after high school or college, the tax laws change for them. More earnings mean that they will file a tax return and pay more taxes. But, for now, they have an advantage and should take full benefit of it.

Babysitting and other self-employment is subject to taxes if they make over a certain amount of money. Selling items on eBay could push your teen over the allowable limit for non-filers. In that case, discuss the forms needed to be filled out at tax time. Encourage your teen to save their money wisely in case the IRS deems that they owe tax money. Check with the IRS website to find out what the income limit is for the current filing year.

Taxes can be a shock for teens when they open their first check. Discussing the matter with them when they take on their first neighborhood job will prepare them for the eventuality. Foster the idea of good record keeping so it is easy to find out if they need to file or not at the end of the year.

It’s never too early to learn about money. Money makes the world go around. We need money to live our lives in today’s society. Kids who learn about money matters at an early age develop a healthy respect for handling it. Here are some usuful tips on how to teach kids money responsibility:

Parents are the first teachers for their kids. Don’t wait until the unit about money comes up in the third grade math class. Teaching the importance of money starts at home between parent and child.

Money doesn’t buy happiness, but it does keep one from starving. Mom and Dad have jobs that pay for the house, the food, the utilities, and everything a family needs. Kids need to know that their parents are not like money trees that you can shake until enough green falls down for a new bike or a new doll. There is only money to spend as long as the parents go to work and earn it.

Kids can start with their birthday and holiday money. Instead of spending it right away, show them how to save the money until there is more to add to it. Once they have saved enough, they can buy something that they want instead of settling for buying something with the little money they have received at that moment.

It is not enough to know that money exists. Kids must be able to handle it responsibly. Create a family budget and let the kids participate in the process. They will see how their parents divide their money between the bills and leisure activities.

Ask each child what they want to do for a special event each month. Setting up a fund for this purpose ensures that there will be money available to finance your ventures. Kids learn that instant gratification is not the only way to be happy. Using money the right way becomes a reward for discipline.

Not teaching kids about money can lead to a disaster. Without proper advice, they could turn to friends who may not be money savvy at all. Acquiring money without a plan for how to keep it results in a lot of money slipping through the cracks.

Kids that can’t manage their own money will expect Mom and Dad to do it for them. Whenever they get in a financial bind, they will call their parents to bail them out. Parents don’t want kids to suffer through unpleasant situations, but kids won’t learn important life lessons when not held accountable for their actions. Teaching this once the bad habits have been formed will be harder than you think.

Responsible money management doesn’t happen as an adult. It begins in childhood with that first birthday five dollar bill. Don’t wait; talk to them now about money. It matters.

Have you ever heard that it is easier to teach things to kids than adults? It’s true. This goes for money, too. If you want your kids to save more than they spend, start at an early age. Here are some tips:

Play money games with your kids. Monopoly was a popular game when I was a kid and kids still like it today. Choosing to buy or sell properties and negotiating fees with other players is good practice for dealing with real money. Just because you have the money to develop your properties doesn’t mean that you have the money for upkeep. Players have to make decisions based on present and future earnings.

It’s easy to forget about money matters when the parents are footing the bill for everything. A five dollar magazine didn’t seem so expensive then. But when they have to pay for it themselves, more thought goes into the process. They’ll think about whether they really need that magazine or not.

Don’t let your kids get hooked on name brand clothing at an early age. It’s okay to have a few name brand items, but they are not the only clothes that will fit their bodies. Take them shopping when you go to Wal-Mart, Target, or a consignment shop. As they choose what to wear, advise them to peruse all of the racks to compare all the prices instead of picking the most expensive clothing.

Take your kids to the grocery store with you. Let them help you make out the grocery list and clip the coupons. As you bargain shop, tell the kids what you are doing. You don’t have to go into great detail; just give them an overview of the process.

Practice what you preach. Resist the temptation to impulse shop when you have extra money. This can set a bad example for the kids, not to mention that it could derail your budget. Save for the things you want and don’t let your emotional state control the purse strings.

Purchase a coin bank. Some kids think that the best money is the kind that folds, but the kind that jingles will spend just as easily. Empty your purse and pockets of their spare coins and collect them in a jar or piggy bank. It may be a good idea to give each child a piggy bank to collect their loose change. Even let them choose their own bank.

You’ll be surprised how quickly the coins will collect. I find coins on the floor and in the couch cushions all the time. Every three months or so, take a trip to the coin machine in the grocery store and find out how much you have saved. The kids can put a portion of their money away for savings and keep the rest to use as they wish.

Learning how to use money is a trial and error kind of process. The money that you give to your kids or that they earn is their money. As a parent, you can advise them how to act, but they must deal with the good choices and the consequences of poor ones. Lessons learned will speak more than scolding.

The first money a child makes is not from a job but from an allowance. The idea of an allowance is an old one, but some parents question if it is the right thing to do. Should you give your child an allowance?

An allowance used to be fifty cents a week. That was a long time ago. Now, an allowance can be as much as five or ten dollars a week. It seems like a small amount, but if you have more than one or two kids, it can add up rather quickly.

An allowance is not the same as money earned for chores performed. An allowance represents a way to teach kids about handling money. In my family, we used to get three dollars each week for allowance. On the weekends, we would ride our bikes to the store and stock up on goodies before heading to a nearby park. We learned early on that if we put our money together, we could buy more snacks than we could separately.

Allowance is based on parental income and the age of the child. If you are struggling to make ends meet, the allowance may have to wait, or it can be small until you can afford for it to be more. When a child asks why they are getting the money, say that it is because they have the privilege of being your son or daughter.

The child receiving the allowance should be able to understand the concept of money. Waiting until the child learns about money in school is an option. The allowance can be a demonstration of the principles that they are being taught in school.

Giving an allowance is an ease into the idea of money and its uses. The child may not want to buy anything at that point, but you can explain the importance of saving a portion of the allowance and keeping the rest available for their needs. If you just bought Jane a new doll and she wants another one, discuss the price and how much money she will need to save to buy her own.

With a goal to work towards, children look forward to receiving their allowance each week and watching the money pile begin to grow. Once they reach the amount they need, it is up to them whether to purchase the doll or keep the money. You have just shown the benefits of delayed gratification.

An allowance is helpful for kids to develop a healthy attitude about money. They didn’t earn the money, but that doesn’t mean that they should squander it either. When they start doing odd jobs around the house for more money, they will already know how to save what they earn.

There is nothing wrong with giving a child an allowance each week or each month. The money is theirs, but it is the parents’ job to help them handle it with care. They will make mistakes, but there is time to correct these before they become responsible for themselves.

Child labor laws regulate what jobs teens can hold and at what age. Teens that are too young to get a job are between a rock and a hard place when they need more money than their weekly allowance offers. Here are seven ways that teenagers can make some extra green, whether they are just under working age or right in the middle of it.

1. Babysitting. This is the basic teenage job. Once they are old enough and can demonstrate responsibility for their younger siblings, let your teen try their skills on other kids. Neighborhood families are always looking for babysitters. If they are not comfortable with babies, start the babysitting service at age two and up.

2. Mow the lawn. Most people would rather help a child that wants to work than pay a lawn care service. Invest in a good lawnmower and get going. The business will be busy in the spring and summer months. Keeping a date planner with appointment times and dates avoids booking more work than they can handle. Lawn mowing is hard work, but rewarding work.

3. Help the elderly. Older neighbors may have a difficult time getting around. Starting an elder care service could be what the neighborhood needs. If you teen is old enough to drive alone, their services can include chauffeuring seniors to appointments, doing the grocery shopping, tidying up, and yard work. Create a flyer and decide on fees. Parents can help in that area. The amount charged should be commensurate with the time commitment involved in each task.

4. Walk those dogs! I’ve seen people come home from work to take care of a new puppy. They need set schedules to train them to go to the bathroom and play time to exercise those limbs. A pet service could be the thing your teen needs to make some money. This service can be just pet walking or it can include a certain amount of grooming. If they have their own pet, they will have learned how to care for them and that expertise can be valuable.

5. Apply for work at a department store. See if they like retail work. They can apply for a summer job or seasonal work at the mall. One advantage is a discount on clothing and other merchandise in the store.

6. Clean out the garage. If your garage looks like mine, that is a job and a half. Enlist the organizational skills of your teenager to set the garage to rights. The fee can be negotiated ahead of time depending on what actually needs to be done.

7. Start a business on the Internet. Kids are usually savvier than parents when it comes to navigating the Internet. EBay offers a forum for selling goods and services. A teen with a talent can make cash here. Does your teen want to write? Use that reporter’s instinct to create articles for sites like Associated Content and get paid for them.

Teenagers today have more options than ever before of making extra money. Explore these seven ways as a start. Your teen may already have an idea in mind.